Corporation Tax Act 2009 section 534

Amounts to be brought into account where section 523 applies

Section 534 sets out the rules for determining what amounts a company holding shares must bring into account for corporation tax purposes when the conditions in section 523 (which deals with shares treated as creditor relationships) are met.

• When shares are treated as a creditor relationship under section 523, specific rules govern the amounts the shareholding company must recognise for tax purposes under this Part.
• The section provides a framework for calculating the credits and debits that arise from holding shares that fall within the special regime for shares accounted for as liabilities of the issuer.
• Where both this section and section 349 (which requires the use of an amortised cost basis of accounting) would otherwise apply, this section takes priority — meaning the amortised cost requirement is overridden.
• The override of the amortised cost basis ensures that the correct tax treatment is applied when shares are being treated as loan relationships, preventing a conflict between two sets of rules.